The Housing Bubble

It’s Friday desk clearing time for this blogger. “Residential real estate prices in Juneau have dropped 5.6% since last October. The Southeast Alaska MLS also shows more homes in Alaska’s capital city are on the market, and they are taking almost a month longer to sell.”

“Wolverton Homes likes to have about 20 available homes on the market in Twin Falls County, Idaho, but when that number crept up to 30, the company decided to organize the first-ever ‘72 Hour Choose Your Rebate’ sale in the region. ‘Our sale was successful,’ said Marketing Director Justin Winson. ‘Now that we got some of those homes sold we can pull another 25 building permits and give our subcontractors enough work over winter.’”

“Many homeowners in the Buffalo Niagara region find themselves struggling to keep up, as rising adjustable- rate mortgage payments combine with falling home values to push them over the edge. A Cheektowaga mother of four shocked four lawmakers as she told them of the $1,200 monthly payment that in a year has turned into $3,300 because of fees and escrow, and threatens to soar to $5,000 in January when the rate resets from 9.75 percent to 16.75 percent.”

“‘We didn’t walk into this to lose our home,’ said the woman. ‘I need help. I need help quick. I don’t want to lose our house.’”

“‘This is an issue that affects each and every one of us, because it affects our property values,’ said Senator Jeffrey D. Klein. ‘We have to make sure this doesn’t happen again.’”

“The subprime mortgage crisis on the mainland so far has been muted here, but even in Hawaii it is dampening demand among second-home buyers, real estate industry experts said yesterday.”

“‘Those California buyers who were buying second homes and condominiums in the $400,000s to $500,000s range are susceptible,’ said on Whittington, regional manager of Countrywide Home Loans in Hawaii.”

“Vacant houses, upset speculators and homeowners left with few answers and little money in the bank, that’s the stark reality for foreclosures in Nevada.”

“It’s a twisted cycle. The government blames the lenders. Lenders blame homeowners. Homeowners in turn want help from the government. The government says there is no money and few solutions.”

“State Senator Warren Hardy said, What obligation does the legislature have to step in and protect them? It’s just investors like Wall Street. ‘What we’re talking about here is speculators who have come into the market and gambled and lost. And I just don’t think the legislature has a role in bailing them out or helping them.’”

“Millions of Australians jumped onto the real-estate bandwagon, spurred also by new sources of financing from nonbank lenders. The median price for a house in Australia is now A$423,900, roughly 70 percent more than in the U.S. During the same period, wages have risen only 19 percent.”

“‘We have to get a mortgage of more than half a million dollars for a unit,’ said Ben Ommundson, who rents a two-bedroom apartment with his partner in a suburb of Sydney, where prices have gained 37 percent in five years. ‘It’s almost impossible to get into the market,’ he said, even with an annual household income of A$130,000.”

“Lanka Rating Agency has warned of a possible slump in the property market which has been growing rapidly in recent years and shows signs of a classic ‘bubble.’ ‘Sri Lanka too has seen the property market being driven by the prospects of the cease-fire and the economic dividends that followed,’ said the statement.”

“‘Over the past decade real estate prices have sky rocketed reaching dizzying heights, setting the stage for a classic real-estate bubble,’ LRA said. ‘The real estate bubble implies that real estate prices are at a high level despite worsening fundamentals, and feed on investors’ expectations that the prices of property will continue to rise even though it is already overvalued.’”

“‘At this juncture it would be wise to step back and take a look at the experiences of South East Asia and the 1997-1998 crises which is largely blamed on lending excessively for real estate.’”

“The Shanghai property market is slowing after a new policy was released last month to curb speculation, prompting investors to put the brakes on. Only 2,674 apartments were sold from October 1 to October 7, only a third of the sales in the last week of September, according to Soufun.com.”

“Shen Jianbin, a 30-year-old senior technical manager, said he would wait for housing prices to go down to a more affordable level. ‘The latest government measures to curb soaring housing prices have strengthened my resolve to wait for a more reasonable price,’ said Shen.”

“The nation’s housing stock increased by nearly 2 million units in the past year, but two-thirds of those newly built homes stand vacant, the Census Bureau reported Friday.”

“The trend toward second homes is evident in the government data, accounting for most of the new housing stock. The number of unoccupied seasonal homes rose by 14% to 4.6 million, while the number of vacant year-round homes that are neither for rent nor for sale rose by 8% to 7.4 million.”

“Only about 11% of the extra vacant units were for sale at the end of the quarter. The number of vacant housing units for sale rose by 139,000, or 7%, to 2.1 million. Vacant units for sale spiked by 38% in 2006.”

“The combination of overbuilding by home builders in the middle of the decade and problems in mortgage markets this year that made it more difficult for buyers to get the financing they needed to buy a home has swelled the inventory of vacant homes on the market.”

“Those who bought homes or condos as investments during the real estate and building booms of a couple of years ago have found an exceptionally weak market for their property. That in turn has lifted the number of vacant homes for sale by 57 percent in just the last three years. And some see the situation only getting worse.”

“‘It’s really striking how high that is compared to historic levels,’ said Dean Baker, co-founder of the Center for Economic and Policy Research. ‘It’s a lot of homes sitting there vacant. It’s very hard to see how we’re near a bottom, when you have that much excess supply.’”

“‘It’s very hard to see how this doesn’t get worse,’ Baker said. ‘It’s certainly possible we could see 3 million, maybe 4 million (vacant homes on the market.)’”

“Wednesday the National Association of Realtors reported that the pace of sales of existing single family homes fell to the lowest level since 1998 in September. Its reading for the sales rate for all existing homes, including condos and other multi-family units, was the lowest since it started tracking those sales in 1999.”

“Today’s housing news news may have a silver lining, if only because ‘this was going to have to happen.’ So says Pat McPherron, an economist at Moody’s Economy.com.”

“He tells John Wordock that ‘there’s an excess supply in the market’ and until home prices come down further, people will keep on ‘walking by the window’ and they won’t buy. McPherron suggests home sellers ‘put themselves in the buyer’s perspective’ and drop prices now.”

The San Francisco Chronicle reports from California. “More than $23.6 billion in California housing wealth will evaporate if real estate prices continue to decline and foreclosures on subprime home loans soar, according to a new congressional report. But some economists, including Jon Haveman, a former senior economist with the president’s Council of Economic Advisers, believes the committee’s findings are too optimistic.”

“‘Things are getting exponentially worse,’ said Haveman, a principal at Beacon Economics in San Rafael. Home prices ‘have only now started to drop. They have a ways to go.’”

“Many economists predict the housing market correction will last several years.”

“‘It took Southern California 10 years to recover (from the last housing downturn), and it took the Bay Area six or seven years,’ said Cynthia Kroll, senior regional economist at the Fisher Center for Real Estate and Urban Economics at UC Berkeley. ‘That’s a very realistic expectation.’”

The Mercury News. “Pinole has a $700,000 house for sale. Bids start at just over half-price. ‘The quaint community of Pinole just 20 miles northeast of San Francisco is about to play host to a once-in-a-lifetime opportunity for homebuyers!’ reads a recent news release from Beverly Hills-based auctioneer Kennedy Wilson.”

“On Nov. 3, the company will auction off the last seven unsold new houses at Serita, a 21-house, soon-to-be-gated subdivision just south of San Pablo Avenue at Pinole Shores Drive. Minimum bids range from $385,000 to $435,000 for houses that once had asking prices of $627,900 to $728,900.”

“‘This (bursting of the) housing bubble has not been a secret in coming,’ said Charlie Long, Pinole’s interim city manager. ‘It just took a while to get here.’”

“In the case of Serita, it is ‘hard to know whether this is a beginning of (a) rush to exits or simply some folks leaving the show early to avoid congestion,’ he said. ‘Time will tell.’”

“‘This will do hell with our comparables,’ said real estate broker Sharon Brown, who is also a member of the San Pablo City Council. ‘We don’t appreciate what’s going on, but we understand it,’ she said. ‘The developers have to do something to get rid of this inventory.’”

“Serita resident Ted Diaz said he bought his house four or five months ago. He is not happy about the prospect of lower price tags on the seven remaining houses. But he and possibly other Serita residents might ask DeNova to give them rebates, he said.”

“‘I think that would be a fair thing to do,’ Diaz said.”

The Modesto Bee. “Condo conversions were all the rage a couple of years ago, as seven Modesto apartment complexes decided to sell about 500 rentals as owner-occupied units. The first couple of projects sold like hotcakes.”

“Then the real estate market cooled, and sales slowed dramatically. Now after two years of trying, one of those multifamily projects is giving up on traditional sales methods. Instead, the Villas at Creekside is going to auction off its final 29 units Nov. 18, with bids starting at $100,000 to $130,000.”

“That’s less than half what those town houses sold for in 2005.”

“‘It costs us a lot of money to carry these units every month, and we can’t keep digging ourselves in deeper,’ said Creekside’s co-owner Pat Cannon. ‘We know it’s time to move on, and we’ll take the price we can get.’”

“So any bid over the minimum will be accepted, and no extra sales or auction commissions will be tacked on, but those who buy will have to pay $220 per month in homeowners association dues.”

“Cannon said they must attract as many bidders as possible because if the town houses only sell for the minimum bids, then he and his partners will lose half their investment. So will Doug Hopkins and his family, who bought a Creekside town house last year.”

“‘We paid pretty much double (the minimum bid),’ Hopkins said. ‘The owners already here are going to really lose out.’”

The Fresno Bee. “New homes in three central San Joaquin Valley communities are being put up for auction next month in what is becoming an increasingly common way for builders to unload bloated inventories.”

“Jonathan Homes, based in Patterson, is including 50 houses in Kerman, Madera and Riverdale in an auction set for Nov. 10 at the Fresno Convention Center.”

“‘In order to begin building new communities in the area, we must first close out some of our existing ones,’ said Tom Skraby, president and chief financial officer.”

“Skraby said an auction is the best way to sell multiple properties quickly. The houses are built but haven’t been sold in Riverdale. Bids start at $139,000.”

“Increasingly, builders in the region are turning to auctions to peddle property. The Nov. 10 auction in Fresno comes on the heels of a similar event Oct. 13 and 14 by Anderson Homes. That builder sold 59 houses at two subdivisions in Los Banos and Manteca.”

“The builders are not holding the auctions because they were financially pressed. Rather, the sales are marketing tools.”

“‘Most of them are close-outs. They are toward the tail end of that development,’ said Michael Schack, of Real Estate Disposition Corp., which is selling the houses of Jonathan Homes.”

“This is the second auction in Fresno since July, when 16 bank-owned houses were sold in 45 minutes of feverish bidding at Four Points by Sheraton.”

“Nhung Nguyen bought two houses at the July auction, closing both escrows a few weeks ago. She bid $132,500 for a five-bedroom, two-bath house on Third Street that was listed for sale at $184,900, and $155,000 for a three-bedroom, two-bath house on East Balch Avenue that was listed for $199,900.”

“‘At that time, it wasn’t a bad deal,’ she said. But prices have fallen in the three months since, and the deals don’t appear as good now.” “‘I’ve seen better deals lately,’ said Nguyen, a real estate agent. ‘There are too many houses in inventory and a lot of foreclosures.’”

“Nguyen added $3,000 to her purchase price on the Third Street house after the auction company called and said the lender, who foreclosed on the property, was balking.”

“‘The lender wanted the price to be $145,000 and wasn’t selling it at $132,000. I said, ‘You can keep it.’ Instead, I paid $135,000, plus 5%,’ Nguyen said.”

“Nguyen said she continues to look for investment property because prices are so low, and can find deals without going to an auction. She just paid $225,000 for a house the seller originally bought for $90,000 in 1990. He listed it for sale for eight months at $345,000, couldn’t find a buyer and finally sold it to Nguyen.”

“‘If you really want to invest, this is the best time,’ she said.”

The Orange County Register. “Early October home-selling stats from DataQuick show…sales activity was down 41% vs. a year ago for the 22 business days ended Oct. 12. If that holds, it’ll mean that O.C.’s losing streak will hit 25 straight months where the buying pace failed to meet last year’s activity levels.”

“Pricing was also weak. The overall median selling price, down 8.8% in a year, held at the 31-month low ($570,000) hit last month.”

From KGET.com. “There’s a new problem with real estate foreclosures as some residents have resorted to stripping everything from appliances to door-knobs from foreclosed homes before the houses go back to the bank.”

“17 News has uncovered two cases where the homes that have belonged to former members of the Crisp and Cole Real Estate team. The first home was owned by Jeriel Salinas, a current agent with Crisp Realty.”

“‘When we came in, we noticed that the appliances were missing,’ said real estate agent Susan Ferguson, who said, after walking into a Seven Oaks home, ‘Oops, there’s no stove. Oh wait a minute, there’s no dishwasher. No hang on a minute, there’s a microwave missing.’”

“Salinas stopped making payments on the home, so the lender took it back. Workers at another home said what occured at the Seven Oaks home is a drop in the bucket, saying door handles have been taken before.”

“‘My boss just spent $1,300 replacing the door handles,’ said construction worker Robert Velez.”

“Velez walked 17 News through a million-dollar home formerly owned by Crisp and Cole Real Estate broker Jayson Costa. Velez said business is good.”

“‘We’ve done a lot of foreclosures, and yeah, a lot lot of houses,’ he said.”

Some housing bubble news from Wall Street and Washington. Wall Street Journal, “Countrywide Financial Corp. posted its first quarterly loss in 25 years in the third quarter on $2.27 billion in mortgage losses and write-downs and soaring credit-loss reserves. The write-downs entailed an $830.9 million write-down in the value of mortgage servicing rights, $716.7 million in the write-down of mortgages and mortgage-backed securities and a $718.6 million loss on the sale of loans and securities.”

“In addition the company’s loan-loss reserves surged to $934 million from $38 million amid continued weakness on prime home-equity loans. Some analysts have been questioning if lenders maintained adequate underwriting standards when making such loans.”

From MarketWatch. “‘Countrywide’s results for the third quarter of 2007 reflect the impact of unprecedented disruptions in the U.S. mortgage market and the global capital markets, as well as continued weakening in the housing market,’ said CEO Angelo Mozilo in a statement.”

The Associated Press. “Some 4.41 percent of Countrywide’s conventional first mortgage loans were delinquent as of Sept. 30, up from 2.57 percent in the year-ago quarter. For prime home-equity loans, delinquencies inched up to 13.5 percent compared to 13.4 percent.”

“The number of subprime loans that were behind in payments soared to 29.08 percent, compared to 18.32 percent in the year-ago period.”

“In the subprime loan category, 12.63 percent of the loans were behind in payments by 90 days or more, more than twice the year-ago rate.”

From Bloomberg. “Late payments and defaults among subprime mortgages packaged into bonds rose last month as higher loan rates and weaker home prices pushed homeowners to the brink, according to data for loans underlying ABX derivative indexes.”

“After September mortgage payments, 21.3 percent of the loan balances from 20 deals created in the first half of 2006 were at least 60 days late, in foreclosure, subject to borrower bankruptcy or already turned into seized property, up from 19.7 percent a month earlier, according to a report yesterday from UBS AG.”

“Prepayments on mortgages also slowed, suggesting it’s more difficult for borrowers to sell their homes or refinance, UBS analysts led by Thomas Zimmerman wrote.”

“‘We also suspect that the deterioration of the housing market might also have affected owners’ psychology with respect to making timely payment’ on loans that have yet to adjust, the analysts wrote. ‘Certain borrowers may have decided that it’s time to throw in the towel.’”

From Business Week. “Big investors are increasingly concerned about the prospect of widespread defaults among U.S. companies with currently sound credit ratings. One glaring piece of evidence? The price of insuring corporate debt against default has soared, according to a new report from Credit Derivatives Research.”

“The concern is driven by several forces, according to Credit Derivatives. There’s a fear that troubles in the housing market will depress consumer spending. There’s also rising nervousness that huge, credit-related write-downs in the banking sector could force a major financial institution to go under, according to Backshall.”

“Jitters abound in the market. On Oct. 25, shares of insurance and banking giant American International Group (AIG) dipped more than 6% at one point, after a Citi Investment Research analyst estimated that AIG could face losses as high as $1.6 billion from its exposure to subprime markets. The financial-services conglomerate said those fears were unfounded.”

“Even more worrisome, the price of insurance on the supposedly safest ’super senior’ class of CDX debt is rising, too. The price of such insurance on the ’super senior’ tranche is now $140,000 a year, up 55% in just the past week, fueled by heavy demand.”

The New York Times. “Europe, which once hoped to avoid major fallout from the summer’s credit crisis, is now feeling an autumn chill of slackening economies and warnings of further market upheaval.”

“The ill tidings came in several European capitals Thursday, including a reduced growth forecast in Germany and a Bank of England report that said financial markets were still vulnerable to shocks from the crisis that originated in the American home mortgage market.”

“‘The shift in sentiment this summer was as sudden as anything I’ve seen in my 15 years in the business,’ said Jörg Krämer, the chief economist of Commerzbank. ‘It is clear that the boom is over.’”

“For those who argued that Europe could sidestep a downturn in the United States…the latest news underscores that the economic vigor of Europe remains closely linked to that of the United States.”

“‘There was only a temporary decoupling of Europe and the U.S.,’ Mr. Krämer of Commerzbank said. ‘The credit crisis has had a real-world economic impact in the U.S., and we are affected by that.’”

The Dallas Morning News. “Some 20 years ago when the housing market was in a similar foreclosure meltdown, government regulators came up with a shrewd plan for quick relief.”

“To fend off record home loan defaults in Texas, federal savings and loan regulators instructed lenders to reduce the monthly payments on thousands of home loans in the state.”

“Indeed, I heard of few cases where lenders moved to cut folks’ payments. And the foreclosure landslide continued to wipe out thousands of the state’s homeowners in the late 1980s and into the early 1990s. Along the way, our housing values got clobbered by more than 20 percent.”

“So you can understand why I wasn’t surprised to read a…study by Moody’s found that only 1 percent of subprime loan servicers had modified adjustable loans to help out strapped borrowers.”

“With everyone from consumer advocates to Washington politicos hollering for borrower forbearance in the mortgage crunch, is this surprising? It shouldn’t be. After all, mortgage companies aren’t in the business of making it easy for borrowers to get out of bad deals.”

“One big mortgage company that bragged about its high loan modification rate later fessed up that it was counting deed-backs in lieu of foreclosure as a ‘modified’ loan. Sure thing – the borrowers were modified right out of their house.”

“At the same time, wild-eyed proposals floating around for legally mandated foreclosure moratoriums and such are just plain crazy. If you declare a foreclosure moratorium, then expect a lending moratorium, too.”

“Who is going to loan money on a property that you can’t collateralize?”

From Reuters. “Standard Pacific Corp, which builds homes in the once-hottest U.S. markets, reported a steep quarterly loss on Thursday, reflecting the deepening U.S. housing slump.”

“The company reported a third-quarter loss of $119.7 million. The results included $223.5 million in charges related to inventory and joint venture impairments as well as land deposit write-offs.”

“Homebuilding revenues fell to $675.5 million from $834.1 million last year as new home deliveries fell 25 percent to 1,697. Would-be buyers canceled their orders at a rate of 34 percent.”

“‘High levels of unsold new and existing homes, decreasing home prices, tenuous homebuyer confidence and further erosion of mortgage credit liquidity during the quarter combined to undermine any stability within the markets,’ said Stephen Scarborough, Standard Pacific’s CEO.”

“Standard Pacific had an eight-month supply of unsold new homes and more than $139.2 billion of adjustable-rate mortgages that are resetting higher in the final three months of this year, raising the possibility of more foreclosures.”

“Standard Pacific gets most of its revenue from California. Home sales in the state fell 39% last month, and the median price of an existing home slumped 4.7% as the mortgage market’s problems hurt demand, the California Assn. of Realtors said.”

“The company, founded 41 years ago, said Wednesday that it was eliminating the dividend to save $10 million a year to reduce debt. It has $2.2 billion in long-term borrowings and a market value of about $380 million.”

From Builder Online. “With home orders falling 23 percent, closings sliding 28 percent, and a 41 percent cancellation rate, Meritage Homes joins the long list of big builders who faced an unstable third quarter. The Arizona-based builder is reporting a net loss of $119 million for the period ending Sept. 30.”

“‘Current market conditions are as weak as they’ve been for many years, and it’s unclear when conditions will improve. Home sellers are reducing prices to compete aggressively for fewer buyers, and buyers are looking for prices to stabilize before purchasing,’ said Meritage CEO Steven J. Hilton in a released statement.”

“‘The precipitous declines in states like Florida, California, and Nevada are well-known, and sales in Texas also slowed noticeably this quarter.’ Hilton said. ‘In order to strengthen our balance sheet and reduce debt, we liquidated over 11 percent of our spec inventory this quarter, renegotiated or opted out of about 6,000 lot purchases under option contracts, and reduced our total lot supply by 20 percent.’”

From Prime Newswire. “Meritage reported…pre-tax non-cash real estate-related and joint venture valuation adjustments totaling $172 million, and goodwill-related write-off of $45 million in the third quarter of 2007.”

“The real estate-related charges included $100 million write-downs of inventory on continuing projects, $49 million for terminated projects, and $23 million relating to joint ventures. The charges by state were as follows: California ($67 million), Arizona ($47 million), Nevada ($32 million), Florida ($15 million), Colorado ($10 million) and one terminated project in Texas ($1 million).”

“The continued weakness and expectations that the downturn of the housing market will be deeper and longer than previously anticipated caused the Company to evaluate and write off $45 million of goodwill, including all goodwill in California ($14 million) and Florida ($10 million), and portions of the goodwill in Nevada ($11 million) and Arizona ($10 million).”

“The goodwill write-offs reflect the current state of the homebuilding market and the accounting consequences of valuing divisions based on declining stock prices.”

The Intelligencer. “Local home builders looked ahead 10 years Thursday and tried to picture what their industry would be like. Their crystal balls were murky.”

“‘I see our future as very muddy, very different,’ said Scott Cannon, president of Cannon Custom Homes in Avondale, Chester County.”

“Jeffrey Orleans, CEO of Bensalem-based Orleans Homebuilders, …blasted national builders such as K. Hovnanian for their widely publicized ‘fire sales,’ in which the builder advertised deep discounts on new homes.’”

“‘Every builder has his own problems,’ Orleans said. ‘But when you see the fire sale ads, it makes people concerned. It’s a negative in the market. This market wasn’t so bad. Now it’s getting worse because the publicity is worse.’”

“Rick Buchholz, VP of Hovnanian in Pennsylvania, defended the sales. ‘The pain of this is exceptional,’ he said. ‘While I don’t write a check (giving money back) every time somebody closes a home, the company does. The need for a sale…for us, it’s a necessity. We need to sell hundreds of homes a month to continue.’”

The Sun Sentinel reports from Florida. “When Jennifer Wigand put down a deposit in 2005 for a condominium, she hoped to quickly sell it and use the profits to help pay her law school loans. Then the housing market plunged. Wigand said she wasn’t worried because the developer had promised she could back out any time and her money would be returned. But in July, when she asked to take part in that program, Wigand said she was told it had been canceled.”

“‘I was disappointed that the developers and their agents went back on their word,’ said the 24-year-old Fort Lauderdale resident. ‘I just want my [$39,200] deposit back.’”

“Wigand last month filed a lawsuit to get out of the deal. Last week, 20 other buyers in Veranda joined her suit.”

“Brad Hunter, director of the South Florida region for Metrostudy, said more lawsuits are being filed because ‘there is a lot of buyer’s remorse out there.’”

“About 40 percent to 60 percent of buyers are trying to wiggle out of their contracts, said Gary Poliakoff, a Fort Lauderdale attorney, referring to a dozen projects in South Florida that his firm represents, including Veranda.”

“‘The claims and the suits are namely a means for an end for investor-buyers to get out of deals where they weren’t able to realize the profits they expected, but it doesn’t mean the reasons are legitimate,’ Poliakoff said.”

“Developers are not budging, Poliakoff said, because they ‘built the buildings on the reliance that the buyers are ready, willing and able to close.’”

“John Mike, chairman of the Realtors Association of the Palm Beaches, said those most upset are buyers who had no intention of living in their properties.”

“‘A lot of those condos, unfortunately, were bought by speculators with the same business plans — to flip their properties, and unfortunately that has created a glut of units. Now were are seeing a large number or people trying to get their money back by hiring lawyers,’ he said.”

“Ori Onn, a real estate agent, signed a contract in 2005 to buy a one-bedroom Phase One condo for $295,000. He put down $59,000 and like Wigand, he planned to flip it.”

“‘They told me they would put it on a resale program if I didn’t go through with the deal,’ Onn said. ‘I just want my money back.’”

The Herald Tribune from Florida. “To some degree, the price-cutting seems to be working in Southwest Florida, with the Sarasota-Bradenton area moving more properties in September than either Fort Lauderdale or Miami, where median prices last month remained at close to their pre-boom peaks.”

“The median price for a home in the Sarasota-Bradenton market has dropped $109,200 since the beginning of 2006, based on the September sales report by the Florida Association of Realtors. Back in January 2006, the median was $353,500. Now it is 31 percent less.”

“But sellers and their agents have been rewarded for their price cutting with better sales volume than markets where cuts have not occurred.”

“Starting early this year, Matthew Augustyniak decided that his Horizon Group, a Bradenton real estate firm, needed to adapt to a stagnant market. He began training agents to convince banks to write off portions of their mortgages in order to move property.”

“‘This month alone, I have 150 sales of new homes that aren’t put in the MLS,’ Augustyniak said.”

“He also is getting individual clients into homes. One woman is buying a Palm-Aire home for $270,000 that originally sold for $400,000 and carried a bank mortgage of $360,000. ‘The bank took the hit on $90,000. So I look at that as a positive effect on my buyer,’ he said.”

“In the Sarasota MLS, there are now 7,967 homes for sale, and the current selling rate is 70 homes a week, representing a 114-week supply, according to Team Dutoit. The 4,673 condo units for sale in mid-October represent a 156-week supply given the current sales rate of 30 per week.”

“To a large degree, the problem was the boom itself, which took the market to excesses both in pricing and in mortgage terms.”

“‘The biggest reason is the unwinding of the housing bubble, the hangover effect, if you will,’ said Geberer, the economist with Orlando-based Fishkind & Associates. ‘We had three years of record growth in new home sales and existing home sales, and three years of record prices. Much of that activity was investor-driven and speculative, for which there is no end user and no end demand.’”

The State from South Carolina. “Despite a steep decline in Columbia-area home sales in September, real estate agents remain optimistic because of the area’s traditionally stable market.”

“Sales sank 18 percent in September over the same month last year, according to data from the S.C. Association of Realtors.”

“Mike Taylor, co-owner of Century 21 Bob Capes Realtors, said the numbers show a return to a normal market after a couple of banner years. ‘It’s just not the record-setting market that we’re used to,’ he said.”

“‘If people are waiting for the times when … every month was a record, it will be a long time before we see that again,’ he said.”

“Home sales were bleak statewide, dropping nearly 18 percent. The coast continued to show the steepest declines, with the Charleston area’s sales dipping more than 40 percent.”

“Columbia’s economic diversification helps during housing swoons, said Tommy Carter, broker-in-charge of Russell & Jeffcoat Realtors’ metro office. ‘Even during bad times, it’s not too bad,’ he said.”

The Free Times from South Carolina. “A virtual meltdown in the subprime mortgage market has contributed to a slowdown in homebuilding and a skyrocketing foreclosure rate. That’s the national picture anyway. Local industry observers say the situation is better in Columbia and statewide.”

“New-home sales have fallen in South Carolina, says Mark Nix, director of the Home Builders Association of South Carolina, adding that the median price of a new home in Columbia is about $185,000.”

“Nick Kremydas, CEO of the South Carolina Association of REALTORS, even calls the falling price of new homes a good thing. ‘After a 10-year boom in real estate, a cooling off period is healthy,’ Kremydas says. ‘It’s not a bust by any means, but the market is catching its breath.’”

“‘We expect thousands and thousands of people to move into South Carolina,’ Kremydas says. ‘We don’t have enough houses for them right now.’”

“And while home prices have fallen, Nix says the Home Builders Association of South Carolina has launched a program dubbed ‘Buy Now’ to encourage people to buy new homes and remind them that it is a good time to buy — if they have the money.”

The News & Observer from North Carolina. “Economists looking for the bottom of the housing slump found instead an accelerating chasm in a new report on the Triangle market. Sales of existing homes fell 24 percent in September, the sharpest decline since the market turned down a year ago.”

“‘That’s big,’ said Moody’s Economy.com economist Michael Helmar, who tracks Triangle housing. ‘Your market is on a downward track, and it looks like there may be some more pain to go.’”

“The monthly report from Triangle MLS provided signs that there is indeed more misery ahead for the region’s largest industry and the hundreds of businesses that depend on it. The inventory of unsold homes rose 23.7 percent from September 2006, and pending sales were down 14 percent, falling to their lowest level in four years.”

“Also, the number of homes on the market with reduced prices was 50 percent higher than a year ago, and the number of withdrawn listings was up 19 percent. The ranks of home sellers who had essentially given up and allowed their listings to expire was up 52 percent.”

“More recently, said Eb Moore, CEO of one of the Triangle’s largest residential brokerages, the market for homes costing $1 million or more has been particularly weak. The number of pricey homes on the market has swelled as owners who financed them with adjustable-rate mortgages try to escape rising monthly payments, he said.”

“The glutted inventory of unsold homes includes 405 properties priced at $1 million, compared with 225 in March 2006. Moore said homes costing $1 million or more now take about a year to sell.”

“The report showed September closings at 1,990 for in Wake, Durham, Orange and Johnston counties, down from 2,630 a year earlier. The decline was nearly double the next largest monthly fall in the past year: 13 percent tumbles in December 2006 and July 2007.”

“‘We’re not bulletproof, we’re just bullet resistant, and that means we’re in a downturn,’ said Moore.”

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